‘Gang of Six’ Plan: Tax Increase or Tax Cut?

There’s a critical question that could determine the future of Washington’s latest deficit-reduction plan: Does it raise taxes?

Unfortunately, the answer is both yes and no.

In Congress, the key question about the price tag attached to any deficit-reduction package is: Compared to what? Once upon a time, everyone used the same baseline—the yardstick for comparison—which was typically current law extended into the future indefinitely.

Today, largely because the tax code is stuffed with temporary provisions that no one really regards as temporary, you can make your package look big, or your opponents’ look small, by picking a more convenient yardstick. Proliferating baselines allow people who agree to a specific proposal to describe it differently, which is why, in the crazy world of Washington budgeting, the same proposal can be said by some to be a tax increase and by others to be a tax cut.

The Gang of Six, a bipartisan group of senators, threw its deficit-reduction package into the arena Tuesday and it is variously described as increasing tax revenues by $1 trillion over 10 years and also decreasing them by $1.5 trillion over 10 years. Huh? …